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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT. ANNAPURNA GUPTA & SHRI T. R. SENTHIL KUMAR
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the order dated 28.11.2017 passed by the Commissioner of Income Tax (Appeals)-3, Rajkot (in short “CIT(A)”) arising out of the assessment order dated 19.03.2015 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the A.Y. 2012-13.
The brief facts of the case is the assessee is an individual deriving income from profit and gains of business and from other sources. For the A.Y. 2012-13 the assessee filed its return of income on 31.03.2014 declaring total income of Rs. 1,79,130/-.
- 2 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13
During the assessment proceeding on the basis of AIR information the assessee has purchased two agricultural lands for a sum of Rs. 60,10,000/- and 49,54,000/- which was not declared by the assessee in its Return of Income. The assessee was called upon to explain the investment made in these two agricultural lands. The assessee explained by way of an affidavit that he is staying in a joint family, he being the elder son of the family and as per his family tradition, his name is mentioned in the sale deeds. Thus, the assessee claimed that the purchase consideration as well as the registration expenses were paid by his parents and brother. Similarly the assessee’s parents and brother of the assessee in their affidavit claimed jointly that they have done the financial transaction in respect of purchase of both agricultural lands. Above explanation were not accepted by the Assessing Officer and the assessee’s 1/4th share in the above property namely Rs. 29,15,544/- were added to the income of the assessee.
Aggrieved against the same assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismiss the appeal as follows:
“8.2 During the appellate proceedings, the AR of the appellant was asked to produce the evidence and details of the source of investment by parents, submitted certain documents which were forwarded to the AO for his comments over the issues involved and the admissibility of the same. The AO submitted its report through the Addl. Commissioner of income Tax and the same was provided to the appellant for his rejoinder and the same was received. All of these have already been reproduced above. 8.3 The appellant in the documents' provided during the appellate proceedings submitted that his mother held certain inherited pieces of land in Balsar (Taluka - 3 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13
Lodhika), parts of which were sold by her alongwith other co-owners being real brothers and sisters in the preceding previous year 2010-11 amounting to Rs. 26,30,500/- and Rs. 9,99,560/- totaling Rs. 36,30,060/-. The appellant has submitted an affidavit before me in which it has been declared that two lands measuring 15.19 Acre and 8.07 Acre located at village Balsar's RS No. 38 'Dedakiyu in Registration District Rajkot Sub-district Lodhika and at Village Balsar's RS No. 59p1 'Khevadiyu in Registration District Rajkot Sub-district Lodhika, Gujarat respectively were transferred alongwith succession rights amongst the 10 successors (the appellant's mother and her 9 real sisters & brothers. It has been further mentioned that the ownership, easement and possession rights of the 8.05 Acre (53%) from the former piece of land and 8.07 Acre (entire part) from the later, were granted to the appellant's mother in pursuant to verbal partition as per the family arrangements. It has also been certified that the said land was sold and the co-owners being the legal heirs signed collectively and received the consideration amount as per the sale deed which was refunded voluntarily to the appellant's mother in cash. The appellant's claim is that thus the sum of Rs. 36,30,060/- [363006(99956+263050)X10] i.e. her share as well as the consideration amounts of other co-owners was available to his mother for the investment in the disputed property and therefore the source of investment is explained.
8.4 After observing the entire factual matrix, it is noted that there is no doubt that theoretically the gift to the relatives [as mentioned in section 56(2)(vii)] without any consideration does not attract any provision for taxation. However, in the instant case, actual existence of any such gift is to be established i.e. whether the mount invested belonged to the appellant's mother who in turn received it from the so-called relatives.
8.5 The first issue to be resolved is the admissibility of the new/additional documents submitted during the appellate proceedings. It is noted that the source of investment has mainly come into picture during the appellate proceedings only. The appellant did not voluntarily produce the source of investment during the assessment proceedings and furnished the same at the time of appellate proceedings only on being asked/enquired. However, it was claimed by the appellant that the same claim was made before the AO who had never asked for elaboration or any explanation or submission of documents in respect of source of investment in the hand of appellant's mother. The AO's objection is that the appellant has not given any details or reasons or sufficient cause which prevented him from submitting these evidences originally at the time of the assessment proceedings. After examining the rival contentions I, exercising my powers under Rule 46A(4) of the Income Tax Rules, admit these evidences for the sake of justice to dispose of this appeal.
8.6 The source of the investment has been said to be the amount received from the sale of inherited property of the appellant's mother and her 9 siblings. It has been declared in an affidavit dated 5.7.2017 (made during the appellate proceedings) and signed by the co-owners of the said immovable property/ies. In - 4 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13 this regard, it is worth noting that the mother of the appellant and her siblings have two inherited properties total acreage of which was 23.26. Now it is being claimed that the mother of the appellant had received the land measuring to 16.12 (8.05+8.07) Acre out of total 23.26 (15.19+8.07) Acre of land which is, in total, nearly 70% of the entire land. It is interesting and surprising that the appellant's mother gets nearly 70% share in the inherited property whereas other 9 legal heirs had given up their shares in favour of appellant's mother. It is not the case that appellant's mother had received bigger share in these two inherited properties in lieu of some given-up share in some other inherited property/ies. It is also pertinent to note that this was only verbal partition which cannot be verified. Factually and practically, this appears unbelievable and lacks any rational or logical basis. It seems to have been created/made to make the sum available in the hand of the appellant's mother. There is nothing to support the claim except the affidavit by the co-owners/legal heirs which has been made on 5.7.2017 during the appellate proceedings itself whereas the sale of the properties took place long back in 2010. Preponderance of probability suggests this claim to be totally unrealistic.
8.7 I do not find anything on record which can prove the healthy financial position of the co-owners/legal heirs enabling them to donate/give the lion's share of the land to the appellant's mother in the name of family arrangements and/or refund the consideration received. The financial capacity of the co- owners/siblings is clouded and indistinct. In my opinion, the entire episode is an afterthought and is cooked up to create a non-existent legal source of the investment in the land purchased in the name of the appellant. The mere affidavit, in the present case, does not suffice to prove the feasibility of the-series of events. I agree with the decisions on which reliance is placed by the AO in his remand report. The same is reproduced here:
"(Quote)"
Affidavit need not always be accepted as correct. It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily in the absence of denial, the statements may be accepted as true, but if there are circumstances which suggests that the statements on affidavit it should not be accepted as true, the absence of denial by the other side, would not by itself, be sufficient to clothe the statements on affidavit with truthfulness and reliability.
Sri Krishna V/s CIT (All) 142 ITR 618
Affidavits are either affirmed as true to knowledge or from information received provided the source of information is disclosed or as to what the deponent believes to be true, provided the grounds for such belief are stated. If an affidavit lacks such verification, it is no of use.
- 5 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13
It can be concluded that the justification of the appellant for the sum available in the hand of mother is unbelievable. The appellant has taken resort of various decisions, which, in the peculiar circumstances of the case, are not applicable. It is consequently held that the claim of investment by the appellant’s mother is fake and bogus. At the best, she can invest only amount of Rs. 363006/- (which is here proportionate share) on behalf of the appellant. This amount is insignificant vis-à-vis total investment in the properties in the name of the appellant. Hence, the investment in the hand of the appellant remains unexplained. Grounds 1 to 3 are disallowed.”
Aggrieved against the same the assessee is in appeal before us raising the following grounds of appeal:
“1. The Commissioner of Income-tax (Appeals)-3, Rajkot erred in confirming the action of assessing officer in making addition of Rs. 29,51,544/- by treating the investment in agriculture land as unexplained investment u/s 69 of the Act in the hands of appellant.
2. The Commissioner of Income-tax (Appeals) -3, Rajkot erred in disbelieving the financial credibility relatives. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.”
During the course of hearing the Ld. A.R. Mr. Dipak M. Rindani submitted before us a small compilation of Paper Book consisting of a Return of Income filed by the assessee’s brother Shri Manubhai D. Shiyal for the A.Y. 2012-13, copy of the capital account and balance sheet and copy of the re-assessment order passed under Section 143(3) r.w.s. 147 of the Act in the case of Manubhai D. Shiyal. The Ld. A.R. submitted that assessee’s brother has offered only the agricultural income of Rs. 2,77,940/- for the A.Y. 2012-13 and in the Balance Sheet reflected the purchase of two agricultural lands situated at Bedi in R. S. No. 126/1 and R. S. No. 126/2 for a consideration of Rs. 31,83,880/- and Rs. 26,24,650/- respectively.
- 6 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13 The above submissions were considered by the Income Tax Officer, Ward-1(1)(2), Rajkot and passed re-assessment order dated 14.12.2019 accepting the NIL Returned income. Thus, the assessee claimed that the purchase of the two agricultural lands offered by his brother namely Manubhai D. Shiyal, which is being accepted and re- assessment is also completed in his hands. Therefore, requested to delete the addition of 1/4th shares in the hands of the assessee, by remanding the case to the file of the AO. The Ld. A.R. also submitted that these are very new documents after passing of the Assessment Order in 2015 and appellate order in 2017 in assessee’s case. Therefore, the same may be placed before the AO for fresh consideration and pass appropriate orders.
Per contra, the Ld. DR appearing for the assessee has no serious objection in remanding the case to the file of the AO for verification of new documents.
Heard both the parties, and perused the materials available on record and Paper Book filed by the assessee, as well as declaration- cum-affidavit filed by assessee’s parents and brother. It is clear that agricultural property bearing Survey No. 126P1 registered as document No. 12871 on 21.10.2011 and another agricultural land bearing Survey No. 126P2 registered as Document No. 5830 on 19.05.2011, are the subject matter of addition by the AO as mentioned in the assessment order, in the case of the assessee before us. The same agricultural land is offered by the assessee’s brother - 7 - Shri Bhanibhai D. Shiyal vs. ITO Asst.Year – 2012-13 Manubhai D. Shiyal in his Return of Income filed on 16.12.2019, pursuant to the 148 notice issued by the Income Tax Department. It is seen from the re-assessment order, the Return filed by the assessee’s brother Manubhai D. Shiyal was accepted by passing an order dated 14.12.2019. As the above Return of Income, Balance Sheet and assessment orders are new documents pertaining to the same agricultural lands, which was not available before the lower authorities. In the above circumstances we deem it fit, that the matter be remanded back to the file of AO for verification of the same and pass fresh assessment order in accordance with law. Needless to say, the assessee should cooperate by producing all the evidences, before the AO for completion of the assessment proceedings. With these observations the appeal filed by the assessee is hereby allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purpose.